Nexus 7 refresh tipped for July: Is cheaper better for Google?

The Nexus 7 tablet will turn one in July, and a new report claims that Google plans on giving the popular slate a makeover to celebrate. Annual makeovers are nothing new for gadgets, but Reuters reports that Google might have a trick up its sleeve for this particular refresh: An even more wallet-friendly price tag for the already cheap tablet.

The Nexus 7 tablet will turn one in July, and a new report claims that Google plans on giving the popular slate a makeover to celebrate. Annual makeovers are nothing new for gadgets, but Reuters reports that Google might have a trick up its sleeve for this particular refresh: An even more wallet-friendly price tag for the already cheap tablet.

Even without any solid sales figures from either party, it's clear that Google's main rival in the Android tablet market is Amazon Kindle Fire line, which starts at $160 for the original model or $200 for the new and improved HD version. Selling a previous model at a discount price is not a new strategy: Apple has selling the iPad 2 alongside the subsequent iPads for over a year now.

It appears Google has yet to decide how it will price the new Nexus in order to be more competitive with Amazon, which doesn't mind selling its tablets as cheaply as possible in order to push digital content like books, movies, and music. One possibility is that Google will maintain the Nexus 7 pricing at $200, while discontinuing the old model. Ho-hum.

The other, more intriguing possibility put forward by the one of Reuters' sources suggests that Google might price the new tablet even more competitively at $149 in a bid to gain market share for Android tablets.

According to iSuppli's teardown analysis of the original Nexus 7, it costs Google and Asus around $170 to manufacture the slate. Reuters' sources indicate we could see a higher-resolution screen and a thinner bezel for in the second-generation Nexus 7, while the heart of the beast is said to swap out Nvidia's Tegra 3 processor for a more energy-efficient Qualcomm processor.

Considering the economy of scale, Google might be able to break even or incur a small loss to get the new Nexus 7 in the hands of more people at $150, albeit at the likely chagrin of its manufacturing partners.

Selling that kind of firepower for $150 doesn't leave a lot of room for other hardware makers to eke out a living. If Google decides to slash prices that far it risks facing a manufacturer mutiny, threatening the long-term viability of Android as platform in a quest for quick boost in adoption rates.

A third possible option would be for Google to approach Apple and Amazon's model and sell the old Nexus 7 at $150 while offering the new version for $200. Even if Google and Asus discontinue manufacturing the current Nexus 7, they could still sell its remaining stock at a reduced price.

Going that route makes more sense than selling the new tablet at $150. If the refresh maintains the $200 price point, Google could pack more competitive components into its 7-inch tablet and avoid angering its hardware partners.